Dubai’s Meraas Holding’s is planning to launch an initial public offering (IPO) of its subsidiary Dubai Parks & Resorts in an effort to support the development of its new theme parks and tourist attractions. The company will be listed of the Dubai Financial Market (DFM).

The developer is just the latest of several Dubai companies that have turned to the IPO market as a means of funding their expansion and project plans, rather than just relying on their own resources or short-term bank debt.

“The UAE IPO pipeline is starting to heat up with more high-profile names planning on hitting the market,” Akber Naqvi, executive director at Dubai-based Al-Masah Capital, tells MEED.

Meeras’ imminent IPO shortly follows an offering launched by UAE-based healthcare and education start-up Amanat Holdings. The AED1.4bn IPO was about 10-times oversubscribed with most of the investment coming from UAE investors.

The firm was established to set up, acquire and incorporate companies in the healthcare and education sectors, predominantly in the UAE and Saudi Arabia. Amanat will also develop and fund infrastructure projects.

The company is likely to make its first acquisition in the first quarter of 2015 and currently has plans to invest AED1.75bn in the coming year.

In September, Emaar Malls, the property developer behind Dubai Mall, decided to list 15.4 per cent of its malls business and raised $1.6bn through the IPO. The developer is now considering listing its hospitality business next year.

The proceeds of the Emaar IPO are being paid out as shareholder dividend rather than being reinvested in the company. The popularity of the IPO demonstrated the strengthening investor appetite in the UAE and wider region.

Under-formation retail firm Marka launched its offering in the first half 2014. It was the first IPO issuer to list on the DFM since 2009. Marka is planning to open retail outlets in various locations across Dubai and Abu Dhabi.

Dubai Parks and Resorts is looking to raise AED2.5bn ($680.6m) from its IPO. This equates to 2,528,731,083 shares, which represents 40 per cent of the company’s post-offer issued share capital. The prospectus will be published on 17 November.

The offer price for each share is set at AED1, plus AED0.01 a share in offer costs. The IPO will bring the subsidiary’s total market capitalisation to about AED6.3bn.

Joint coordinators and bookrunners on the offering are Emirates Financial Services, Goldman Sachs and HSBC Bank Middle East. EFG Hermes UAE is a joint bookrunner, while Shuaa Capital is a co-manager.

The proceeds of the IPO will be used to support the construction of a leisure and entertainment destination comprising three separate theme parks, a four-star hotel and a retail, dining and entertainment district to be called Riverpark.

The three parks will be based around different concepts. One will be called Motiongate, and will be themed around Hollywood films. The second park will be the Middle East’s first Legoland. The final park will have a Bollywood theme.

The development will be set in approximately 16 million square feet of land. The project is intended to be completed before the end of the third quarter in 2016.

Proceeds from the IPO form the equity portion of the development’s project funding, coupled with cash from Meraas. The company has also raised $1.5bn through a club loan.

Appetite for the forthcoming offering is looking healthy, say analysts, despite Dubai Parks & Resorts not yet having a track record in developing such projects.

“Despite not having its own track record, Dubai Parks can rely on the track record of its parent company Meraas, which has developed a very good reputation in local markets for delivering high-quality residential and commercial developments,” says Naqvi.

He adds that the decision to have a fixed price for the IPO, as opposed to opting for a book-building approach, will ensure strong retail demand.

The growing tourism market in Dubai will also give investors’ confidence in the company’s prospects.

Approximately 5.82 million tourists stayed in Dubai’s hotels during the first half of 2014, an increase of 2.3 per cent compared to the same period last year, according to Dubai Department of Tourism figures.

“As long as the projected financials (when the prospectus comes out) stay within reason, Dubai Parks IPO has the potential to surpass the success enjoyed so far by recent UAE IPO’s,” says Naqvi.

If successful, it will likely lead to even more companies considering flotations to fund growth.